Loans from family and friends

A problem for many people who want to start a business is a lack of sufficient personal savings for start-up the business. Asking for help from those closest to you can be another smart move when looking for capital. Family and friends can be a great source for financing a new or growing business. If they believe in you and your idea, friends and relatives are sometimes willing to fund you. A great thing about this option is that friends and family tend to lend or invest either interest-free or at a very low interest rate. It is make your job much easier, especially at the beginning of your venture.

Although going to family and friends remains the most common way of landing start-up financing, doing so is not without its down side. If you acquire financing from friends and family, you are putting important personal relationship in jeopardy if your business is fails and you are unable to repay your friends and family. It is also important to make it clear to the person who is lending you the money that you will treat the loan just like a commercial loan from bank.

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